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Could bitcoin destabilise the dollar?

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I was thinking about cryptocurrencies and the fact that most of us have heard of bitcoin and Ethereum. You may have heard of Dogecoin and Shiba Inu. Maybe you even know Cordana and Polygon. But do you know about UNI and Potcoin? Or Putincoin and Trumpcoin? What about Whoppercoin or Catcoin?

It seems like madness that there are so many coins being created out there. Most are backed by nothing but madness, but then there is the madness of crowds. People invest in anything they think is funny and interesting. That’s why there are over 18,000 cryptocurrencies out there.

How Many Cryptocurrencies Are There In 2022As of March 2022, there are 18,465 cryptocurrencies in existence. Discounting many “dead” cryptos leaves only around 10,363 active cryptocurrencies. There are upwards of 300 million cryptocurrency users across the globe. And approximately 18,000 businesses now accept a form of crypto as payment.

Sources: CoinMarketCapinvesting.com

18,000 what?

I have a slight issue with this, in that I can believe in the madness of crowds but where is the crowd? Most are crowding around bitcoin and Ethereum, but what about Jesuscoin? If we can believe in Jesus, surely we can believe in Jesuscoin? Or what about Fuzzballs? If we can believe in Fuzz, surely we can believe in Fuzzballs? Or what about  SexCoin,  TitCoin and the SpankChain? After all, most innovation is created through porn, so why not go with the flow?

What this really brings home is the madness of crowds, as it’s all about what you believe in. You believe in Jesus, buy Jesuscoin. You believe in porn, buy SexCoin. It’s your choice.

The same applies to the US dollar and Chinese Yuan. You believe in the US Government or the PRC and you can have their currency. The difference is that over 300 million people believe in the US dollar and almost 1.5 billion people believe in the Chinese Yuan. How many people believe in the Jesuscoin or SexCoin? How many people believe in the Dentacoin or Garlicoin?

It’s all about belief but, with 18,000 coins out there, it’s a little bit unbelievable. There is no way that 18,000 coins are needed on the network. In fact, there’s no need for 18 coins on the network. What we really need is a single global coin on the network. A coin that can be traded anywhere, anytime, in real-time with anyone.

That’s what bitcoin set out to achieve, and is kind of getting there. Just not this week (did you check today's price?).

The thing is that if we create a global coin that can be traded anywhere, anytime with anyone, in real-time, what does that mean for national currencies?

Do we need the US dollar, the Chinese Yuan, the euro, when you can trade with anyone, anywhere, anytime with a networked coin? Hmmm … no wonder governments are all doing CBDCs (Central Bank Digital Currencies) as, if we believe in a networked coin, who needs governments and central banks?

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Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

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